Market Buzz: Stocks gain on Fed stimulus, optimism from Germany

Russian stocks are expected to remain in the black on the back of general investor optimism in the West. Expectations of monetary stimulus in the US and positive expectations for the future development of the German economy are pushing indices up.

The Fed will announce $45bn in monthly Treasury buying today following a two-day meeting, Bloomberg says. President Barack Obama told ABC News he remains optimistic that a budget agreement to avert the automatic spending cuts and tax increases known as the fiscal cliff can be reached as he traded proposals with House Republicans.

On Tuesday, stock markets kept their upward momentum even after Republican House Speaker John Boehner said that President Barack Obama is slow-walking talks to avoid the fiscal cliff, and hasn't outlined spending cuts he's willing to support as part of a compromise. Senate Majority Leader Harry Reid said Tuesday afternoon that it would be "extremely difficult'' to pass legislation to address the so-called fiscal cliff before Christmas, but added there's still a chance it can be done.

“The market has been very susceptible to `fiscal cliff' headlines,” said Todd Salamone, a senior vice president at Schaeffers Investment Research, adding that stocks have rallied more on good news than they have fallen on indications that talks were stalling.

Russia’s key indices closed Tuesday session on an upbeat note, with the MICEX adding 0.05% to 1,448.43 and the RTS finishing trading flat – at 1,484.57.

In the US, the Dow Jones industrial average gained 78.56 points to 13,248.44. It was up as much as 137 points earlier in the day. The S&P 500 finished up 9.29 points at 1,427.84. The Nasdaq composite pushed up 35.34 points to 3,022.30.

Investors were also encouraged by a report that showed ZEW index of German investor optimism rose more than expected in December, suggesting market professionals think Europe's largest economy will avoid an outright recession.

“It is very welcome news as it indicated that Europe’s beating heart could avoid being dragged back into a recession by the rest of Europe which continues to struggle and as long as Germany’s in good shape, then so is the rest of the continent and it improves the chances of the single currency remaining intact,” Angus Campbell, Head of Market Analysis, Capital Spreads,told RT via e-mail.

Germany's DAX gained 0.8 percent to 7,589.75 points, closing in on tough technical resistance around 7,600 – a level where it ran out of steam in May 2011 and which had previously not been seen since 2008.